International Monetary Fund (IMF) Reports Early Recovery Signs in Nepal's Economy
Nepal’s economy is showing preliminary signs of recovery, according to an official from the International Monetary Fund (IMF), following a staff visit to Kathmandu. Led by Ms. Sarwat Jahan, the IMF team visited Nepal from September 11 to 22, 2024, to evaluate recent macroeconomic trends and assess the implementation of the Extended Credit Facility (ECF)-supported program.
Ms. Jahan highlighted key economic indicators pointing to positive growth, noting that import growth has entered positive territory, tax collections are on the rise, and public investment is increasing. Credit growth has also shown signs of recovery, although it remains below nominal GDP growth. Inflation has decelerated to 3.6 percent as of mid-July, due in part to favorable commodity prices and reduced demand. Strong remittance inflows, a recovering tourism sector, and lower imports have bolstered international reserves.
She emphasized the importance of accelerating reforms to ensure sustainable and inclusive economic growth. Key areas of focus include improving public investment execution, strengthening domestic revenue mobilization, and the timely distribution of Child Grants. Ms. Jahan also stressed the need for continued vigilance in the banking sector, particularly regarding non-performing loans and capital constraints. She welcomed recent amendments to the Anti-Money Laundering Act and called for further reforms, including amending the Nepal Rastra Bank (NRB) Act, completing NRB's external audit, and enhancing transparency in public enterprises. These measures, along with the recently passed Investment Facilitation Act, are expected to improve Nepal's investment climate.
The IMF staff team met with key officials, including Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel, NRB Governor Maha Prasad Adhikari, and National Planning Commission Vice-Chairman Dr. Shiva Raj Adhikari. Discussions were also held with private sector representatives and development partners. The IMF expressed gratitude for the productive discussions and warm hospitality extended by Nepali authorities during their visit.
